India, which is set to surpass Brazil as the world’s biggest sugar producer, may extend subsidy to exporters beyond April next year as it tries to boost overseas sales amid a glut of the sweetener caused by a record harvest.
The Union government in April announced a freight subsidy of as much as Rs1,450 a tonne to run down stockpiles after production reached a record. The incentive is valid for a year.
“We feel that unless we liquidate the stocks, which are amply available, we will not be able to improve the position of farmers and sugar mills,” agriculture minister Sharad Pawar said in New Delhi on Thursday. “We will take a decision soon,” he added.
Sugar shipments from India in the year starting October may more than double to 2.5 million tonnes (mt), making the country the biggest exporter of the commodity after Thailand and Australia, US foreign agricultural service had said in May. A further increase in supplies from India may weigh on global prices of sugar, among the worst-performing agricultural commodities in the past year. The country may increase sugar output by 15% next year from an estimated record 28.5mt this year, Pawar had said on 23 August.
The government doubled its sugar reserves to 5mt, and said on Wednesday that it would give mills more financial incentives to help them pay sugar cane growers.
“If we are to liquidate stocks, there is a limitation in the domestic market,” Pawar said. “We have to export.”
The stocks of Bajaj Hindusthan Ltd and Balrampur Chini Mills Ltd, the country’s biggest sugar producers, rose for a second day. Bajaj shares added 4% to Rs184.20, while Balrampur Chini rose 7.4% to Rs89.20 on the Bombay Stock Exchange (BSE) on Wednesday—a day on which the companies had their biggest single-day gain after sugar prices jumped the most since 1989 and the Centre announced incentives. On Thursday, Bajaj ended at Rs173.60 while Balrampur closed at Rs80.40 on BSE.
Sugar mills have bagged contracts to export 1.8mt since the government ended a six-month ban on overseas sales in January. Mills have signed contracts to sell more than 500,000 tonnes of raw sugar? from December.